Leaving Buyside Job - Am I crazy??

madgames's picture
Rank: Orangutan | 303

I've been working at a multi-strategy hedge fund for the past 4 years. I've had solid performance and am well respected by my team. My comp continues to go up and this past year I broke $800k - this should continue to grow as long as I continue to perform.

My hours are by no means crazy and the lifestyle is relatively decent. I like researching companies, but I feel that the current firm's strategy is not one that can continually deliver alpha.

I've been out of school for 6-7 years now and was accepted to a top 5 business school. I've always wanted to try more entrepreneurial careers and I feel like this is my opportunity to take a two year break and at least try to pursue other career paths. And if all else fails I could likely return to the buyside, albeit in a more junior position than I am now.

I could also skip the whole bschool thing and just jump to another fund, but there are many social aspects of bschool that I view as priceless - travel opportunity, meeting a ton of new people and having an excuse to take a breather from work. I wanted to get WSO's take on this as some of my friends understand and others think I'm a bit crazy.

Thanks in advance for your thoughts.

Comments (44)

Mar 2, 2014

1/10

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Mar 2, 2014

pics of your paycheck or it didn't happen

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Mar 2, 2014

douche

GTFO

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Mar 2, 2014

This is a serious post...

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Mar 2, 2014

If you were making 800k, there would be an extremely high chance you wouldn't bother posting on here, so like stated, Proof or your a moron.

I think- therefore I fuck

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Mar 2, 2014

I've been on this board for a long time, just not a frequent poster. Not trolling, Would appreciate some real commentary / feedback if anyone has any otherwise I will just delete the post. Not trying to be a douche at all.

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Best Response
Mar 2, 2014

i think they're looking for something like this..

Photo

WSO's COO (Chief Operating Orangutan) | My Linkedin

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Mar 2, 2014

It is highly suspect since a guy making $800K, as others pointed out, would likely not post here. Also, in general, the jobs coming out of b-school - even the buyside ones - won't get anywhere near the striking price of $800K.

So assuming this isn't BS - then the answer is, is it worth taking a $1.8 MM opportunity cost (assuming $200K bschool cost - and actually, it would be higher if we convert the $200K cost to a pre-tax figure to match your $800K gross pay) for travel and making new friends? And "to pursue other opportunities" - unless you want to start your own business and can only develop a large network via an MBA and only if that business becomes wildly successful, you're not likely to hit the quoted $800K mark. So it just depends on what you value - money or the intangibles of new friends, bschool experience, trying something new.

But if you like what you do and have a good track record - you could just jump to a different fund that you feel is more sustainable and b-school won't really help you and doesn't make sense.

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Mar 2, 2014

Thanks Kanon - I understand that bschool will never make sense for me from a financial perspective. And as I look 10 years down the road the question I ask myself is will I regret passing up the opportunity to go to school more or staying in my role? And I figure I can always make that capital back in the long-run. Also the 800k figure is off of 2013 which as everyone knows was a record year for most funds so again my comp is quite volatile and heavily weighted on performance so it could drastically change if i do not continue to perform.

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Mar 3, 2014

Just a thought... any way for you to go to b-school and then go back to your current fund? I mean, you are also looking at alternative career opportunities, but just with the potential promise of going back to your old firm, you can have your cake (the b-school exp) and eat it too (job security at a well paying fund ... while having the optional of leaving for greener pastures if they exist).

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Mar 2, 2014

Obvious troll, but very appropriate with the likes of @"endoftheroad" showing off their "problems!" deciding between a Wharton MBA and a $300k paycheck. @"endoftheroad" please spare us your "problems" next time.

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Mar 6, 2014
krypton:

Obvious troll, but very appropriate with the likes of @endoftheroad showing off their "problems!" deciding between a Wharton MBA and a $300k paycheck. @endoftheroad please spare us your "problems" next time.

u mad bro?

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Mar 5, 2014

.

Johnny Rocket

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Mar 3, 2014

No real input here (it's really a choice you have to make yourself in that no one else can enter your brain and see the appropriate weights you give money and friends/rest/etc.), but given his post history, he doesn't seem like a troll.

If you can't tell from the responses in here, not many people would leave the industry after making $800k (for a non-H/S school to boot), but who knows? You might discover another career that's more fulfilling. IMO you wouldn't be "crazy" for choosing business school, but you should know exactly what you want to get out of it before going in and carefully weigh the pros/cons.

Mar 3, 2014

This guy has been on the site for almost 8 years, and has posted in every major HF thread over that time. I think it is highly possible that he isn't lying. The timeframe matches up with what he mentions. Stop being a college junior and screaming troll whenever there is a thread that deviates from "Chance my bestfriends cousin for GS TMT lulz omg"...

*Disclaimer: I did not read any of his posts in the other threads so I'm basing this on a quick scan of his post history.

"Look, you're my best friend, so don't take this the wrong way. In twenty years, if you're still livin' here, comin' over to my house to watch the Patriots games, still workin' construction, I'll fuckin' kill you. That's not a threat, that's a fact.

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Mar 3, 2014

Yeah, read some of them. Seems legit to me

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Mar 3, 2014

just throw money at start up / business ideas in your spare time.

Mar 3, 2014

For the people calling BS on the comp number it is plausible. Multi-strategy funds generally have dozens of different PMs. Each PM gets a very small percent of the mgmt fee that the fund charges and a defined amount of the incentive fee. He has to pay his analysts out of what he brings in based on that agreement.

For example: SAC used to charge 3 and 50. The PM has a book of $400mm, he gets 30bps and 17% of the profits. From that 30bps he probably pays a base salary to himself and 2-3 analysts. If he is up 20% on the year, that is $40mm to the investor, $26mm to SAC, and $14mm to his team. If the PM keeps $10mm of that for himself he still has $4mm in bonuses to distribute.

SAC may be a little extreme, but Caxton/Tudor/Millenium all have high fees. There is a ton of variability in analyst comp for large multi-manager funds.

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Mar 3, 2014

would agree with you that it is plausible. What makes the timing of this odd is a thread from last week that was very similar.

@"madgames", really easy to give some cred to your story if you get Certified...connect with me on LinkedIn when you get a chance. http://www.linkedin.com/profile/view?id=28740334&t...

Can't confirm your comp, but then can confirm that you work for multi-strat HF for last 4 yrs...

Mar 3, 2014
Gray Fox:

For the people calling BS on the comp number it is plausible.

Personally, I don't think the comp number is the problem. The problem is someone would actually think of leaving to b-school while making $800K, knowing they will likely make a fraction of that after graduation. That seems extraordinarily unlikely.

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Mar 3, 2014
Gray Fox:

For the people calling BS on the comp number it is plausible. Multi-strategy funds generally have dozens of different PMs. Each PM gets a very small percent of the mgmt fee that the fund charges and a defined amount of the incentive fee. He has to pay his analysts out of what he brings in based on that agreement.

For example: SAC used to charge 3 and 50. The PM has a book of $400mm, he gets 30bps and 17% of the profits. From that 30bps he probably pays a base salary to himself and 2-3 analysts. If he is up 20% on the year, that is $40mm to the investor, $26mm to SAC, and $14mm to his team. If the PM keeps $10mm of that for himself he still has $4mm in bonuses to distribute.

SAC may be a little extreme, but Caxton/Tudor/Millenium all have high fees. There is a ton of variability in analyst comp for large multi-manager funds.

Very helpful - SB'd.

Mar 3, 2014

I work in PWM and not at a HF (and make about half of what you do); but prior to finance I started multiple technology startup companies....let me lend you a little perspective here.

Everyone on this board seems to glamorize the concept of being an entrepreneur.. Startup some wonderful company, make tons of money, add something to society and then, of course, do an IPO and become rich.....the reality for 99.99% of the startups is extremely different.

Raising capital is a complete bitch, your unique product or service means nothing initially so be prepared to spend all your time trying to convince clients to even talk to you, get ready to put all of your networth at risk, be prepared to work 7 days a week, you will and need to deal with EVERYTHING, marketing, product development, payroll, taxes, fixing the photocopier, etc, etc....oh, and don't expect to get paid anything for the first couple of years and even if your business does get up and running, you still won't make anything near what you currently make (not if you have other investors involved).

Starting a successful company can be one of the most rewarding and financially lucrative activities anyone can attempt. I would never tell anyone not to try this but unlike myself (when I was out there), you actually have something to lose. Yes you might be able to go out, give it a shot and then jump back into another HF gig....but you can't be 100% sure. You are taking a risk and you need to be conscience of that.

As Rusty above just mentioned, work your way into it while keeping your current job. Come up with an idea, go out and try to raise capital, work on it in your spare time and see if you really want to go down this path. If you come to a point where you have something viable, then you can make a choice. EIther way good luck to you.

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Mar 3, 2014

This isn't impossible money to make... only strange part is suddenly changing one's mind pretty drastically, and something like an unsustainable strategy at one fund being why you want to leave the industry altogether.

I'd test the waters and try and find a shop that's a better fit for you, unless it's actually the job itself you don't like.

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Mar 3, 2014

OP is an obviously exaggerated hypothetical mixed with bits of truth.

Mar 3, 2014

I'd probably suck it up for a few more years to save up a nut, then you'll really have optionality. Exec MBA programs are always out there, and probably would make more sense for you given your situation. The guys I knew coming into full-time b-school from very premium roles (eg. Director in IB), all of them went into roles with dramatically lower comp, at least initially. I'd also encourage you to look at other options with better quality of life e.g. traditional long-only or lower intensity HFs. It's possible that a refresh in terms of city, team or work focus would accomplish 90% of what you're looking for without sacrificing your comp package (or at least you'd retain most of it).

Mar 3, 2014

I think the app bonanza tech bubble 2.0 is probably responsible for a lot of these threads.

Mar 5, 2014

Off-topic but would you mind outlining your career path?

In my opinion, your plan does seem crazy. If I were in your shoes, I would stick with your current role (which as you mentioned has a decent work-life balance) and start a business on the side. I would only consider quitting If it really had the potential to take off. Leaving right now just seems like too much of a risk - you haven't disclosed any of your entrepreneurial plans yet and you even admitted you may have to come work at another fund in a more junior role.

I do understand your point about wanting a breather and the chance to meet new people but the opportunity cost just seems too high at the moment. It doesn't seem like there's anything that is negative about your current role. But I guess everyone has different priorities in life.

Mar 5, 2014

I think you should go back to b-school, Impossible is Nothing!

Mar 5, 2014

Weird thing about OP is why given this much experience in industry you would ask this on WSO where you just get trolled by high school kids. At this point in your career should have enough experience and friends to consult within the industry. Also given at this point in your career plus this being hf vs more standardized pe path your decisision is sufficiently idiosyncratic for outside input to be relatively useless.

Mar 6, 2014

OP I have lurked this forum for years and only been a user for one, but I do remember your posts and do believe that you're not lying about the neighborhood of your comp. Obviously I have no experience to give, but maybe it would help if you specified what you mean by "entrepreneurial careers"?

Do you want to be the first corporate guy in a new startup/venture? Do you want to throw on a sweatshirt and become the next techie? (which would sound more like a midlife crisis than anything, as well as a terrible idea IMO given that I contrarily believe that this is a bad time to be starting a tech startup, since it will get mid-level or so by the time the next collapse happens...anyway...) Do you just want to start a new brick-and-mortar? I would imagine you would want experience in that industry before you went balls-to-the-walls, if so.

Or do you just want to start your own anything? If that's the case, why don't you just start your own fund or become a solo investor? That seems like it would be the most plausible to me, but then again I'm inexperienced and don't know how hard that is today...or whether you are burned out.

Just wondering in case that will clarify for others who might be able to better answer your question.

Mar 8, 2014

Wtf? If you're looking to be an entrepreneur, why would you go to business school?

If you want to take time off, quit and take time off, then start your business.

If the strategy at your fund is not long term viable, then keep making more money until that day. It's not like you don't enjoy the job.

If you're making $800k, lets say in 2 years you'll be at $1mm. Stay as long as possible. My opinion is that if you're living a lifestyle that's costing you more than $200k/yr, your blowing money like a moron. You have a job that is demanding, so it's not like you're jet setting spending money. That said, 4 more years at ~$1mm means you should stash $1.6mm cash.

At that point decide what you want to do. Seems like you did that classic mistake of applying to b school to "figure it all out" when you get there. If you're not laser focused on your path, why did you even apply? Now it's putting unnecessary and unreasonable doubt in your life.

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Mar 8, 2014

Guys
Sorry for the delay it's been a crazy week. I do like the job, I just don't love what I do. And I want to try to find what I am most passionate about. Basically I think that if I don't try something new now it will become harder and harder to step out of my role and try something new given the opportunity cost. At the end of the day I know looking at this from a financial perspective will never ever make sense so I am trying to look at it holistically.
Some responses to individual messages below:

@Blackhat - I'm also a bit burnt out and think right now would be an ideal time for a break. Hopefully in the long-run 2 years isn't a big deal to my bottom line.
@DickFuld - There are certain things I value more than money at least for now when I have it like the opportunity to travel and meet a diverse and talented group of people.
@leveredarb - I've been a member on this Board since I was in college and it used to be very helpful. I thought some of the HF guys would have interesting perspective, didn't realize I'd get trolled so hard. In retrospect I should not have put that comp # in there...

Mar 8, 2014

You're operating under the 'grass is greener' mindset. It's not. It's very difficult to imagine that things aren't much better somewhere else. But, everybody has to deal with bullshit and stress. At least you don't hate your job and you're getting paid fairly well for it (especially for your age). Most likely, you go to some job you end up hating more and you get paid less than you do now.

I don't think you are evaluating your situation objectively.

Mar 8, 2014

@DickFuld - I agree, but I think worst case I can hopefully come back to the buyside if it does not work out. Obviously this gives up a lot of career development and time and assumes I can get back to buyside.

Mar 8, 2014
madgames:

@DickFuld - I agree, but I think worst case I can hopefully come back to the buyside if it does not work out. Obviously this gives up a lot of career development and time and assumes I can get back to buyside.

You probably can't...at least not at the same level. Let's say you spend two years at school and 2-3 years goofing around at some start-up. You will be 4-5 years out of the game and looking from the outside to get back in. Nobody will understand why you left if you want to return at that point. You won't pick up where you left off, that's for certain.

Mar 11, 2014

@dickfuld my timeline is much shorter than that. I'm starting to work on a few things now and then I'll try something new during the summer after my first year. At that point id decide on whether to return to the buyside. I wouldn't wait a few years and I agree that would really hurt my candidacy.

Mar 10, 2014

if you fell unhappy about your position, no matter how successful you are right now, give it a try. Just be very conscient that you are going to forgo compensation and take the risk of not enjoying your new position. It's just like a trade, just make it if you feel that even if it goes wrong you will look back and think that risk/rewards were acceptable.

Beyond that, do you have a opening for a new analyst? currently working in a prop desk but looking to switch to hf

Mar 13, 2014

If I were you I would search for that thing you are passionate about on the side while you're still in your *fantastic* position. I would then begin to save a nest egg, separate from your retirement fund, to help make your passion happen when you enter early retirement.

Also @"edonskoy" has the right idea. Do you have any room at your fund for an eager go getter ready to learn :|

Mar 23, 2014

A bit more clarity on what you are looking for would help. Are you wanting to start your own company? Are you wanting to join a start up? And if you do, do you want to do sales? Business development? (I'm assuming you don't have any product development experience. It sounds like you are trying to force something to happen as someone said b/c the grass seems greener.

The entrepreneurs I know (my boss has founded 4 or so). They start things that are a natural progression for them. They don't just take a pause in career and say I'm going to think for 2 years and hope I reach an epiphany. They usually have a next idea while they are finishing up their current one. He also builds his network by talking to other innovators and VCs. If you want to be where the action is. I'd talk to ppl already doing it not a MBA program where ppl like u are trying to figure out a transition too.

You've obviously achieved a lot already, and u have the luxury many other early entrepreneurs don't have which is capital. I'd continue your gig and think about ideas that u can execute with you comfortably leading. Otherwise u are essentially going to have to prove your self in a new skill set you may not even like or be good at until you are experienced enough to take like a director position.

Best of luck.

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Mar 23, 2014

I don't know 1 person that loves their job. Especially one that makes decent money. My advice: work their for 5 more years then do whatever you want since you'll have saved some $Ms

Apr 6, 2014

The more and more I read threads on here, the more shocked I become. Everyone creates this illusion that Wall Street jobs are so much more competitive compensation-wise than other fields; at the helm we have people who go on here and post about 450k base salaries and 800k salaries like money's just handed out here. If you're young and making that much money, it's a rare exception. In reality, who cares. I know a guy that's 27 that owns over 20 franchise stores and makes 7 figures. Let's all debate who makes the most money now. Seriously? Stop trying to flash money in peoples' faces, it's foolish.

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Apr 6, 2014
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Apr 7, 2014
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I eat success for breakfast...with skim milk

Apr 7, 2014
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